US Needs Japan, Netherlands and Korea on Chips Deal, Envoy Says

Isabel Reynolds
·2 min read
49

(Bloomberg) -- The US is in discussions with Japan, the Netherlands and South Korea to restrict semiconductor exports to China, and it needs all parties to agree on a deal, US Ambassador to Japan Rahm Emanuel said in an interview.

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Stressing the importance of South Korean and Dutch cooperation alongside Japan, he was speaking by phone days ahead of Prime Minister Fumio Kishida’s summit with President Joe Biden on Friday. The two allies will endorse a joint statement covering a wide range of security issues, but work is continuing on a chip industry restriction deal, he said.

“You’ve got to work through not just Japan but you’ve got to work through obviously Korea, you’ve got to work through the Dutch,” Emanuel said. “It’s going to take a lot of work.”

South Korea is home to two of the world’s leading memory chipmakers, Samsung Electronics Co. and SK Hynix Inc., while the Netherlands has ASML Holding NV, maker of the world’s most advanced chip lithography systems. Japan, whose businesses provide essential machinery and materials for chip fabricators, also plays a critical role in the industry’s supply chain. Washington hopes to align all three nations in pursuing its stricter measures on China exports.

“All the parties are at the table, all the parties have a mutual shared interest in the outcome. Everybody has different aspects of the industry,” Emanuel said. The deal being sought “will not be just bilateral,” he said. “It must be multilateral.”

The South Korean government is not in discussions with the US regarding participation in American restrictions on exports to China, according to a trade ministry spokesman.

China Courts South Korea as US Chips Campaign Gains Steam

The US rolled out sweeping measures in October to limit the sale of advanced semiconductors and chipmaking equipment to China, which the Biden administration said aim to limit the Chinese military’s access to and development of advanced tech. Beijing has challenged the move at the World Trade Organization and said the restrictions threaten the stability of the global supply chain.

Japan and the Netherlands have agreed in principle to join the US in tightening controls, Bloomberg reported last month. Tokyo officials declined to comment on whether a deal is nearing completion. Adding South Korea would be a further debilitating blow to Chinese industry and Beijing has sought to improve ties with its neighbor amid concerns over Washington’s plans.

Rahm described what the US was trying to do as “momentous.”

“Semiconductors are a critical linchpin in not only the global economic system, but any economy’s modern function,” he said. “The use of those and the research that goes into those — you can’t have a cavalier approach to it.”

--With assistance from Sohee Kim.

(Adds final two paragraphs.)

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